We are pleased to share the new issue of Ferguson Partners' Global Quarterly newsletter, highlighting key transactions, people moves and industry trends impacting the global real assets industries across North America, Europe, and Asia Pacific.
The second quarter of 2023 presented a challenging economic landscape characterized by persistent high inflation and rising interest rates, which were widespread global concerns except for Japan. The banking sector faced distress, the ongoing conflict in Europe continued to cause instability, and there were concerns about a potential recession in the U.S. These factors contributed significantly to market volatility, leading to reduced investor confidence, defensive investment strategies, and caution in recruitment efforts. Despite these challenges, there is optimism for improving conditions as the year progresses, with expectations of decreasing inflation and interest rates.
While commercial real estate remains challenging in North America and Europe, Asia is experiencing a rise in workers returning to offices, resulting in a positive impact on urban retail.
Investors have shifted their focus to long-term strategies, particularly favoring growth sectors such as industrial & logistics and living sectors. The expansion of the living sector, including student housing, co-living, affordable housing, and senior housing, will continue, with private equity players investing in and supporting operational platforms specializing in these segments.
The hospitality industry continues to recover from the pandemic, driven by increased business and leisure travel, especially as China removes travel restrictions both domestically and internationally. This removal of restrictions will provide an additional boost to the travel industry. As the demand for hotel assets grows, investors are seeking to add hospitality specialists to their platforms, property services groups are expanding their advisory and brokerage capabilities, and operators are selectively augmenting their development teams.
Emerging investment asset classes, particularly in Asia, such as life science, medical office, R&D, and innovation hubs, are gaining momentum, enabling integrated real estate developers and investors to capitalize on their ability to create new products. The infrastructure sector remains resilient due to investor interest in the expanding digital infrastructure space, decarbonization efforts, and social infrastructure themes.
Regardless of the asset class, the era of cheap financing that once boosted returns has come to an end. Consequently, all investors must now approach their investment and asset management strategies with greater thoughtfulness and proactive rigor to achieve positive outcomes. It will be crucial for investors to have the right asset and operational teams in place moving forward.
Please enjoy this issue of our Global Quarterly newsletter. As always, we are available to discuss the challenges you are facing and the talent that can help your organizations identify and take advantage of the imminent opportunities.
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